Due to strong performance by its beef and pork segments, Tyson Foods is still on track to deliver the second-best annual earnings per share in company history despite depressed chicken pricing, input costs at or near record levels and a sluggish economy, according to Donnie Smith, president and CEO.
The chicken segment's 1% return on sales would have been nearly 10% had it not been for $250 million in additional grain and feed ingredient costs in the company's fiscal third quarter 2011, said Smith. That would have been a record quarter, despite unusually low chicken prices. "That's how much better we are as a producer, but it's hard for you to see because input costs outstripped those gains," said Smith. "However, industry fundamentals are beginning to improve, and that should support the pricing we need to offset our higher inputs."
Tyson plans to continue reinvesting in operational efficiencies to further improve the chicken segment's cost structure and competitive position. "When supply and demand get back in balance and this thing turns around, we're going to be in a great position," said Smith. "Everything we've achieved, we achieved while running uphill against the wind."